Question

Midway Metal employs the weighted average method and produces wire baskets in the bending department. In the work in process inventory T-account for the bending department, the 3,100 units in the beginning inventory had direct materials costs of $3,500 and conversion costs of $2,700. What is the average cost per unit for direct materials?

a. $1.13
b. $1.25
c. $1.35
d. $1.45

Answer 1

The average cost per unit for direct materials at Midway Metal, calculated using the total cost divided by the quantity of units, is $1.13, which aligns with option 'a'.

Step-by-step explanation:

The student has asked to calculate the average cost per unit for direct materials at the Midway Metal company. In order to find this, we will use the formula for average cost which is total cost divided by the quantity of output produced. In the given scenario, the company has 3,100 units in beginning inventory with direct materials costs of $3,500. Therefore, the average cost per unit for direct materials is calculated as follows:

AC = TC/Q = $3,500 / 3,100 units = $1.1290 per unit

When rounded to the nearest cent, the average cost per unit for direct materials is $1.13, which corresponds with option 'a'.